I assumed that it was being replaced by the passato prossimo without the avere/essere, but this doesn't appear to be the case. I'm very confused on this point.
I wouldn't say that the passato remoto is going extinct, but it is certainly true that in northern Italy it is rarely used. Actually in northern Italy we tend to always use the passato prossimo, even if the past event has no relation with the present, and we should use the passato remoto instead. This use in general doesn't pose great problems of communication, but it isn't strictly correct. Those who speak correct italian use both the passato prossimo and the passato remoto, today as in the past.
For instance, it is correct to say "Fermi ricevette nel 1938 il Premio Nobel per la fisica" and "Fermi ha ricevuto nel 1938 il Premio che oggi riceverai anche tu", but it is not correct to say "Fermi ha ricevuto nel 1938 il Premio Nobel per la fisica".
Anyways, the last phrase is perfectly understandable, and no one will correct you if you use it in an informal context.